Revenues up in down economy, but Ga. lawmakers still likely to trim budget

Errin Haines

Saturday

Dec 31, 2011 at 8:38 PM

ATLANTA — The state is finally collecting more tax money after a bruising recession, but Georgia lawmakers returning to Atlanta for the 2012 legislative session are likely to contend with a budget shortfall created by rising costs in health care and education and accounting tricks used to stitch together last year’s budget.

With the state’s unemployment rate still at nearly 10 percent and well above the national average, job creation and related issues like workforce development programs and infrastructure spending are also expected to be on the agenda.

Prison overcrowding is causing lawmakers to examine the criminal justice reform, and a joint legislative panel will weigh solutions for how to ease the financial burden on the state’s correctional facilities. Republican lawmakers also have not been shy about their plans to again take up social issues like guns and abortion, both perennial favorites.

Looming over the entire process will be the sense of urgency to wrap up at the Capitol and hit the campaign trail, as all 236 seats in the General Assembly will be on the November ballot. Legislators will be wooing new constituents in freshly-drawn districts, and won’t be able to raise money during the 40-day session — which starts Jan. 9 and is typically drawn out until early spring. That leaves only a few months for incumbents seeking re-election to win over voters ahead of the July 31 state primary elections.

The state’s finances are in better shape than the past few years. Revenues collected by the state have increased for 17 straight months as economic activity gradually picks up. Gov. Nathan Deal must submit his budget plan next month, and it is likely state lawmakers may still need to trim spending.

Analysts who watch the state budget believe Georgia could potentially face a deficit of somewhere between $260 million to $350 million in the current fiscal year ending in June. Several issues contributed to the funding gap. Deal and lawmakers used Medicaid money to prop up the state employee health care program, said Alan Essig, executive director of the Georgia Budget and Policy Institute.

Georgia also delayed payments to private insurance companies who run the state’s Medicaid program, and now that bill is coming due. More people are enrolling in Medicaid, likely because of the weak economy, which further increases costs. Deal told state departments to trim their budgets in mid-year, which should help narrow the funding gap.

“We’re still working in a situation where we’ll have to make further cuts in the future,” Essig said. “It’s good news that revenues are growing, but they’re not growing nearly fast enough. The pain hasn’t gone away.”

But the larger question is whether the economy will pick up significantly enough to avoid spending cuts in next year’s budget. State financial officials have told investors they expect 5 percent growth in revenues for the year starting in July. That still might not be enough to avoid spending cuts. And the Republican majority in the Statehouse has strongly resisted tax increases.

State Sen. Jack Hill, chairman of the Senate Appropriations Committee, said lawmakers will have to focus on funding what he described as core state functions.

The state’s fiscally unsustainable criminal justice system could see substantial changes as lawmakers are expected to recommend ways to reform the way Georgia courts are run, overhaul the prison system and transform how offenders are sentenced. Leading the support for the potential policy shift is Deal, a longtime attorney whose son is a superior court judge running an alternative sentencing program addressing drug offenders in north Georgia.

Weeks ahead of the session, legislators introduced three bills already making headlines. Among the bills submitted ahead of the session are a proposal similar to the “personhood” referendum rejected by Mississippi voters last month, a bill requiring recipients of unemployment benefits to perform at least 24 hours of community service per week for a nonprofit charitable organization, and legislation that would make getting a concealed weapon permit voluntary.

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